Privatisations in Germany, the Netherlands and Great Britain Mark Stephens (Centre for Housing Policy) Marja Elsinga (OTB)

Scope of Presentation Meanings of Privatisation Experience in the three countries Conclusions

Meanings of Privatisation Narrow sense: –Transfer of state-owned assets to the non-state sector Broader sense: –Withdrawal of state support for the social rented sector Widest sense: –Policies that promote the provision of private housing, especially home- ownership

Social Rented Housing The big shrinkages occur only as a result of policy

Germany Unusual definition of “social” housing Meaning of social rented housing: –Historic emphasis on provision of new housing over its ownership –Availability of subsidies to private landlords –Ownership of social rented sector diverse Social rented housing defined by: –Receipt of subsidy and the contingent obligations: who can be housed level of rents

Germany the “melting away” of the social rented sector Implications of supporting private sector: –Decline of social rented sector in-built –When subsidies are repaid the housing ceases to be “social” and “commitments” end But the figures appear exaggerated to non- German eyes: –67% of units owned by Municipal Housing Companies are not “social” by this definition –If included, social rented sector rises to almost 10%.

Germany: the “new” privatisation Sale of dwellings owned by Municipal Housing Companies: –Notably Dresden (2006): 48,000 units –Others blocked Sale of dwellings owned by (former) state companies: –Stock of former state railways; public pension fund (2003): 80,000 units But note residential housing excluded from G-REITs introduced in 2007

The Netherlands A non-state social rented sector Social rented sector already formally non-state: –Largest sector in Europe –Almost wholly owned by housing associations In principle independent in 1995: –State loans written off –No more subsidies –  become financially very strong

The Netherlands: How independent? Housing associations supported by: –Central Housing Fund (CFV): Legally a non-departmental public body Financial supervisor Helps financially distressed landlords Since 2001 redistributes equity for special purposes –Guarantee Fund (WSW): Legally private But ultimate guarantors are central government and municipalities

The Netherlands The Key Question In all aspects of Dutch housing policy the key question is: –“who actually owns the housing associations’ assets?”

The UK Historic dependence on state provision Historically social rented sector: –Developed –Owned –Managed –By the state (local authorities/ municipalities) Peaked at 33% in late 1970s Now just under 20% of households And now state share down to 55%

The UK The Right to Buy Right of sitting tenants to buy house at discount: made possible by maturity of sector and inflation Local authorities obliged to sell Reduced levels of new build Sector shrinks RTB part of “residualisation” – but allocation policies and economic restructuring also important drivers

The UK The “Right to Buy”: 1.7 million sales in England

The UK The Right to Buy runs its course

The UK Large Scale Voluntary Transfers (LSVTs) Bottom-up policy: –Emerges in late 80s as subsidy arrangements hit surplus councils –Later used to facilitate refinancing of housing in need of renovation –The latter often requires subsidies –All transfers require ballots of tenants –New landlords are non-profit housing associations

The UK LSVT: almost 1 million units transferred in England

Conclusions Is ownership of housing the key to defining its function? –Ownership of social rented housing is diverse Even where “private”: –Government can exert influence through subsidy, regulation, supervision, etc –European Commission may regard as “public” sector

. Privatisation: –Like social rented housing has many meanings –Ownership of asset should not be confused with: Organisational behaviour Government influence